Leaders Of Cryptocurrency Laundering Syndicate Arrested In Hong Kong

Hong Kong authorities arrested four men believed to be members of a money-laundering syndicate using cryptocurrencies.

Customs officials said Thursday they brought down the syndicate - which processed more than $154 million in illegal funds over the past year.

Authorities said the arrests and dismantling of the group was the first successful operation of its kind in the former British colony. Authorities said the men arrested were the alleged local masterminds of the syndicate.

"It is the first time in Hong Kong that a money-laundering ring involved in using cryptocurrency to wash dirty cash and conceal the source of criminal assets was broken up," Senior Superintendent Mark Woo Wai-kwan said.

Authorities said the men opened accounts with several local banks using shell companies. The men conducted transactions through cryptocurrency exchanges, turning laundered digital currencies into real cash for clients. Authorities said they have since frozen more than HK$20 million from the accounts.

The operation - codenamed "Coin Breaker" - was launched July 8. Authorities said they had identified the masterminds of the syndicate and their operations during months of investigations and surveillance.  Five premises were raided during the operation.

Head of Syndicate Crimes Investigation Bureau of Customs, Mark Woo, said that more than $113 million worth of cryptocurrencies were actively being used in 40 different electronic wallets.  

Investigators said more than 60% of the transactions done over the last 15 months were channeled through bank accounts in Singapore. Officials said the syndicate mostly used the cryptocurrency Tether in the transactions. Authorities did not name the banks or the trading platforms that were used by the syndicate.

Because of the way they were designed, it is nearly impossible to identify and trace cryptocurrency transactions. This has made it an attractive financial asset for criminal networks and money launderers around the world.

Earlier in the week, police in the UK said they had seized a record $377 million in cryptocurrency used by a criminal syndicate. Last month, Chinese authorities announced that they had arrested more than a thousand people linked to criminal cryptocurrency activities.